Exporters fret over surging freight rates, delays at ports
Freight rates have started increasing once again after remaining steady in December, rising 10% in the first week of January, raising fresh concerns for exporters of basmati rice, tea, apparel and leather goods among others.
The waiting time of consignments at ports has also increased to more than a month from 15 days, trade insiders said.
Mohit Agarwal, director at Asian Tea & Exports, said freight rates to places like Iran and Kazakhstan have gone up by $500-1,000 per container over the last 10 days. "We do not know what is driving this fresh surge in freight rates," he said. "The consignments are lying at the ports for a month or more at times." Agarwal said he does not see freight rates cooling off in the immediate future.
Some exporters that ET spoke with said they plan to pass on the rising cost to consumers eventually.
"The container freight rates have gone up by 3-4 times as compared to last year. This cost will eventually be passed on to consumers in the coming days," said Ashwani Arora, CEO of LT Foods that owns rice brand Daawat.
"However, we are not seeing any delay in delivery time to the consumer since LT Foods has made investment in automation, which has reduced the turnaround time of the container," he said.
Ramesh Juneja, regional chairman of Council Leather Exports, however, said leather goods exporters are not sure whether they will be able to pass on the rising freight cost to buyers in Europe and the US as there is a lot of uncertainty due to the spread of Covid-19.
Exporters also raised concern over demand. "Rising freight cost is a global phenomenon," said Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO). "However, what is more important is how the export markets behave in the next fortnight in view of a surge in Covid cases."
India achieved its highest-yet monthly exports of $37 billion in December, registering a jump of 37% year on year. The government has said the country is on track to achieve an export target of $400 billion, adding that the top 10 major commodity groups constituting 80% of exports grew 41% year on year last month.